Europe's top competition watchdog yesterday approved the proposed merger of Orange and T-Mobile in the UK, but only after obtaining concessions from the mobile phone operators' parent companies.

The joint venture between France Telecom's Orange UK and Deutsche Telekom's T-Mobile UK plans to start trading in April, and will be Britain's largest mobile operator .

British consumer groups reacted angrily to the European Commission's decision to approve the merger on the fastest possible timetable, accusing Brussels of clearing the transaction with "indecent haste".

The merger could also destabilise a UK government-sponsored effort to end a long-standing dispute between Britain's mobile operators over their ownership of radio spectrum.

Telefónica's O 2 UK subsidiary, and Vodafone's British business, are not planning to challenge the Commission's decision.

O2 and Vodafone, the UK's largest and second-largest operators, are instead expected to intensify efforts to poach customers off the new market leader.

Orange and T-Mobile, the third and fourth-largest operators, are attempting an ambitious integration aimed at creating cost savings worth £3.5bn.

The operators want to rationalise networks and shops, and cut staff, while O2 and Vodafone are hoping to increase their market share if the joint venture runs into difficulties.

Tom Alexander, chief executive designate of the combined Orange/T-Mobile entity, expressed confidence that the integration would run smoothly, and insisted the transaction was "great, great news" for consumers.

The merger will reduce the number of British network operators from five to four, and consumer groups had been calling for the UK competition authorities to conduct an in-depth investigation into the transaction.

Which?, the consumer magazine and campaigns body, accused the Commission of failing to protect consumers' interests.

Brussels' decision to approve the merger is conditional on the combined Orange/T-Mobile entity having an infrastructure-sharing agreement with 3, the UK's smallest network operator, owned by Hong Kong's Hutchison Whampoa.

The Commission said 3's "viability" could be threatened if it lacked a network-sharing deal with the joint venture that would generate cost savings.

Brussels' merger approval is also conditional on the joint venture relinquishing up to 25 per cent of its radio spectrum at the 1,800 MHz bandwidth. This spectrum is suitable for supporting fourth-generation wireless technology that will enable faster mobile web-surfing.

source:ft